Should collectors flip over $10 million coin sale?

Experts say coin collecting is due for some art world-like attention

The most valuable U.S. rare coin ever reported sold is the 1794 Flowing Hair dollar that some experts believe is the very first silver dollar ever struck by the United States Mint.

The record-breaking $10 million sale last month of a rare U.S. silver dollar has some coin collectors seeing gold.

The sale of the 1794 coin, known as the Flowing Hair silver dollar because of the image on the front, has given many in the world of numismatics—or currency collecting—reason to hope that higher values will follow for all sorts of coins. But experts differ in their opinions about whether the effects of the sale will trickle down to any but the rarest of rare coins.

The sale, the first-ever eight-figure transaction for a coin, surpassed the industry’s previous record by more than $2 million. And the figure could have been even higher. Legend Numismatics, the dealer that purchased the coin at an auction in New York, said it was prepared to pay as much as $15 million.

The coin’s rarity goes beyond the fact that the Flowing Hair was the first dollar coin released by the U.S. This particular example is believed to have been the first ever made. “George Washington could have held it,” says Laura Sperber, co-partner of Legend Numismatics, which is based in Lincroft, N.J.

Numismatists say coin collecting is ripe for the kind of consideration from investors that has long been associated with the art world, where paintings occasionally fetch over $100 million. Professionals say the coin field already has been moving in that direction, with several $1 million-plus sales of individual coins in recent years, a far cry from just a couple of decades ago. (The Flowing Hair Silver Dollar sold for just $506,000 at a 1991 auction.)

“The Mona Lisas of numismatics are just exploding in price,” says Jeffrey F. Bernberg, an Illinois coin dealer and president of the Professional Numismatists Guild.

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Still, for all the fuss over the $10 million sale, there are signs the broader coin market still has hurdles to clear. A Coin World magazine index that tracks the prices of key U.S. sales was down 0.5% in 2012, after posting a modest 5% gain in 2011. By contrast, the Dow Jones Industrial Average was up both years—10.2% in 2012 and 8.4% in 2011.

Moreover, the number of serious collectors appears to have slipped in recent years. The American Numismatic Association reports that its membership has declined slightly in recent years from about 32,000 to 27,000.

Appraisers and dealers who specialize in other collectibles say the sale of the $10 million coin may speak more to the demand for rarities of all kinds than for coins in particular. In other words, the market is always strong for a one-of-a-kind painting or baseball card, but such demand doesn’t necessarily translate to the rest of the category. “The best of the best in any field always brings a ridiculous premium,” says Jonathan Greenstein, a New York dealer who specializes in Jewish ritual art.

Steve Roach, editor of Coin World magazine, thinks that logic may apply to the Flowing Hair’s impact, as well. “Will it trickle down to the $10,000 coin? I’m not sure,” he says. “But does it make a $1 million coin more valuable? I think so.”

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